A divided state agency yesterday approved a scaled-down version of a plan by Public Service Electric & Gas to build grid-supply solar arrays on brownfields and landfills amid concerns why about utility customers are paying to support the projects.
In an unusual split 3-2 vote, the Board of Public Utilities accepted a tentative settlement allowing the utility to spend $80 million to develop an additional 33 megawatts of solar farms on former garbage dumps and brownfields in its service territory.
The debate over the proposal was a bit surprising since the state Division of Rate Counsel and most other parties in the case had endorsed the plan in the settlement, which is much less ambitious than the $276 million, 100-megawatt program originally filed by PSE&G.
The opposition to the project suggests some commissioners may be rethinking just how much backing from ratepayers is necessary to continue promoting solar energy as an alternative to more conventional — and polluting — ways of producing electricity. New Jersey ranks among the nation’s leaders in solar installations, a distinction achieved with the help of roughly $5 billion in subsidies from utility customers over the past decade and more.
One commissioner, Diane Solomon, questioned why the utility was relying on ratepayer assistance to build solar farms when an unregulated affiliate (PSEG Solar Source) has built projects without such help in at least a dozen other states. “Nothing is preventing the PSE&G affiliate from taking the risk in New Jersey,’’ Solomon said. (PSEG Solar has built one solar project in Hackettstown.)
Other criticisms of the PSE&G proposal involved whether it was giving the utility an unfair competitive advantage in the marketplace, since the program guarantees the company a 9.75 percent return on equity.
But most of the board backed the proposal, noting it is a much smaller version of what the utility originally proposed that won the backing of the Rate Counsel, which represents the interests of utility customers.
“These landfills and brownfields are being used for a societal benefit — creating clean energy,’’ said Commissioner Joseph Fiordaliso. Backers also noted that the state’s Energy Master Plan tries to steer grid-supply solar projects to unused dumps and brownfields, instead of open space and farmland.
Ratepayers promote solar installations by paying for solar credits (dubbed “SRECs” or solar renewable energy credits) that owners of solar systems earn for the electricity their panels produce. With the cost of solar dropping significantly, there has been growing sentiment among some policymakers that such subsidies may no longer be needed.
Even some environmentalists concede the need to look at the issue. “It should be a wakeup call for PSE&G and other solar developers the days of ratepayer subsidies and big SRECs are over and you have to change,’’ said Jeff Tittel, director of the New Jersey Sierra Club.
Steven Goldenberg, a lawyer representing large energy users who declined to sign the settlement said he hoped the scaled-down approach signaled a transition to less reliance on ratepayers.
“PSE&G has amply demonstrated its ability to develop large, utility-scale solar projects through a competitive affiliate and without ratepayer support and these efforts should be encouraged,’’ he said in written comments to the agency.
BPU President Richard Mroz dismissed criticism the new program—an extension of a prior landfill/brownfield solar proposal by the utility—gives PSE&G a competitive advantage in the marketplace. “This is not a competitive market; it’s a managed market,’’ he said.
The impact on customers is negligible, according to BPU staff. It will initially cost the typical residential customers about 4 cents a year, rising to a maximum of 24 cents annually.
Nevertheless, Mroz asked staff to come up with possible recommendations for how to manage the market going forward.
PSE&G, in a press release, applauded the board’s action in approving its Solar 4 All program. “Solar 4 All creates jobs, aligns with the state’s energy master plan, and helps the environment by directly increasing the amount of solar in the state,’’ said Courtney McCormick, a vice president at PSE&G.
By the end of the year, the utility will have built about 53 megawatts of solar capacity — enough to power about 8,500 homes annually — on nine landfill and brownfield sites.